Prenuptial agreements are a topic we hear a lot about in our culture. Usually what we hear relates to celebrities and their marital exploits. Who’s marrying who? They got divorced how soon? Which spouse is going to walk away with the house? These are the types of questions we ask ourselves as we pass by a tabloid magazine or a gossip show on television. These are issues that impact divorce cases for “regular” people like us every day. However, it’s the scale and magnitude of a celebrity marriage that interests us. Like moths to a flame, we are drawn to that discord.
When we learn that a prenuptial or premarital agreement is a part of the case it does not come as a surprise. That’s what the wealthy do, right? A “prenup” is something for the rich to utilize when dividing up property in anticipation of a divorce. Some of us will assume the couple who created the prenuptial agreement assumes that a divorce is going to happen. What a cynical way to approach marriage, we think. That isn’t how we do things in the “real world.”
In the real world, people just like you and I do create prenuptial agreements. Prenups as they are often called are not just for the rich. At the Law Office of Bryan Fagan, we create prenuptial agreements for people from all walks of life. Here are some topics worth considering.
What does a prenuptial agreement do?
A prenuptial agreement allows for people preparing to marry a way for their assets and debts to be divided in the event of a divorce. Important topics such as spousal support may also be covered in a prenuptial agreement. As we will see, even the day-to-day expenses of marriage are relevant in a prenuptial agreement. In short, all things financial in a marriage if fair game in your prenuptial agreement. The circumstances of your life determine how your prenuptial agreement can be drafted.
Why draft a prenuptial agreement?
In short, peace of mind is a huge advantage and factor when it comes to prenuptial agreements. Many people have significant concerns about marrying. The idea of giving up autonomy in your life to another person leads many to delay or avoid marriage. This does not have to be your reality. The prenuptial agreement puts you in a position where planning for your marriage is possible.
Having different expectations than your spouse in the marriage can be disastrous. Understanding your roles differently puts many people in a position where a divorce becomes more of an option. By drafting a premarital agreement, you avoid unnecessary surprises in marriage.
What sort of concrete discussions have you had with your spouse-to-be? Have you spent more time planning your wedding reception than talking about finances, children, and other expectations? If so, then you are not alone. With that said, it pays to have a plan when it comes to working through these issues. A prenuptial agreement can be that plan for your family.
Creating a Prenuptial Agreement
A prenuptial agreement allows you and your fiancé to take advantage of protections for yourselves and your finances. Simply going through your finances in a detailed fashion allows both of you to understand more about one another and your situation. We just discussed how many people avoid or never have these types of discussions. That does not have to be the case. Instead, working with an experienced family law attorney allows these types of discussions to be had sooner rather than later.
Are you thinking more and more about a prenuptial agreement? Do not know where to begin? Rather than worrying why not create a plan? The attorneys with the Law Office of Bryan Fagan have the plan that you need to move on with your marriage. That doesn’t mean jumping into a marriage without thinking. Rather, you can create a game plan for yourself and your relationship that prepares you for unforeseen events.
Contact the Law Office of Bryan Fagan today for a free-of-charge consultation. These consultations are available with an experienced family law attorney. There is no substitute for good advice in a time like this. We can represent you while drafting a prenuptial agreement. Our attorneys are skilled at working through complex scenarios and helping couples arrive at equitable solutions.
Drafting a Valid Prenuptial Agreement in Texas
As with any contract, some requirements must be in place for your prenuptial agreement to be valid. At the end of the day, you need your document to be enforceable in court. If not, then the prenuptial agreement is not worth the paper that it is printed on. With that in mind let us consider the requirements for a valid prenuptial agreement in Texas.
First, both you and your fiancé must disclose all relevant financial information to the other person. Next, there must be an indication in the document that both of you agreed with full knowledge and consent of what is included in the document. Finally, both you and your fiancé must sign the document and have it notarized.
Clear and concise language is important. Trying to draft a prenuptial agreement that looks like something out of Shakespeare is not prudent. Ultimately, a practical prenuptial agreement allows both you and your fiancé to have a document that is functional and understandable. Anything less does not function well and threatens to be unenforceable by a family court judge in the future.
What can happen if you don’t have a prenuptial agreement?
Everyone knows that our actions or inactions have consequences. Getting married in Texas means being intentional about who you are marrying. However, the details surrounding your fiancée’s financial life are also critical. It does not take an expert to understand that a spouse bears at least some responsibility for the actions or inactions of their partner. With that said, working through a prenuptial agreement helps avoid problems in this regard.
One thing to bear in mind about a divorce is that there is a great deal of uncertainty regarding the outcomes of a case. With so many moving pieces and factors to consider you and your spouse cannot be sure about how the case will turn out. Specifically with finances, there are a wide range of options and outcomes which are possible.
With that backdrop limiting as much doubt should be your goal. A prenuptial agreement. Being able to look at your prenuptial agreement as a road map helps. The prenuptial agreement prevents the two of you from becoming sidetracked and instead places the focus on one another in any relationship. These agreements are highly beneficial to couples of all ages and backgrounds.
Voiding or Doing Away With a Prenuptial Agreement
A prenuptial agreement takes time and effort to draft. An experienced family law attorney is a great resource to have when it comes to drafting this important document. Attorneys, such as those with the Law Office of Bryan Fagan have experience working with people over many years. We understand and have seen what works for families and what does not. That expertise is important when you are drafting a document like a premarital agreement.
The most direct way to do away with your prenuptial agreement is simply by agreement with your fiancé or spouse. Both of you can choose to tear the document up. At this time you may decide that drafting another prenuptial agreement is in your best interest. Or simply not drafting another document is also a possibility. After the time and energy put into drafting the initial document, you and your spouse should consider your options before doing something like this.
A second way to dissolve a prenuptial agreement is through a court. During a divorce proceeding a family court judge may determine that your prenuptial agreement is invalid for several reasons. This can be true for the entire document or simply for portions of the document. Whatever the case may be, you need to be prepared to have your document judged by a family court. This places a heavy emphasis on creating a document that is straightforward and well-drafted.
Separate Versus Community Property
Texas is a community property state. This means that upon your divorce all property is presumed to be community property and thus is divisible by a family court judge. This presumption is overcome by clear and convincing evidence showing that a particular item was owned by you or your spouse before your marriage. This type of property is known as separate property. Any property acquired during your marriage by gift or inheritance is also considered to be the separate property of the receiver.
This is a basic overview of community property law in Texas. If you would like a more in-depth perspective the Law Office of Bryan Fagan has written extensively on the subject. Here are some interesting and informative blog posts on the subject. However, for this article, we are focusing on how a prenuptial agreement benefits people like you. Deciding to marry someone requires a great deal of thought. Very few of us would jump into a marriage without knowing the person well.
With that said, many of us marry someone without first considering the financial implications. Marriage is not just formalizing a living arrangement. Rather, under the laws of Texas it is a defining moment for your financial life. The way that the law treats your property when ending a marriage differs significantly from ending a relationship. With that in mind having a plan is a great idea.
Cohabitating With Your Significant Other
More people cohabitate with one another than in any prior generation in American history. The trends show that living with your significant other before marriage is common. Some studies suggest more people are cohabitating rather than living with a spouse. Considering this, it is important to have your ducks in a row as far as property is concerned. Not just physical property like silverware and dishes, but real property like homes and raw land.
Consider, first, whether you and your partner have lived together before marriage. If so, then there may be property-related issues to resolve now. Sharing a home, making payments towards a mortgage, or purchasing a home together complicates your financial landscape. One of the advantages of negotiating a prenuptial agreement is that you can determine solutions to future problems sooner rather than later. Negotiating with your fiancé now is simpler in most situations than doing so with an upset spouse later.
Determining how your property is treated upon divorce is a major aspect of a prenuptial agreement. When cohabitation occurs that tends to muddy the waters as far as ownership and equity are concerned. Who owns the property? Whose name is on the deed? Did you contribute income towards the mortgage? Answering these questions now provides clarity if a divorce becomes necessary.
Specific Questions to Ask Regarding Property and Cohabitation
Mapping out a plan as far as how real property is treated at the time of divorce is job number one. Consider the home you and your fiancé live in. Is that home going to be treated as community property? Or are both you and your fiancé going to have separate property interests in the home in a divorce? Consider the circumstances regarding the purchase of the home. Whose name(s) is on the deed or title? What were the income sources used as a down payment? Answer these questions before negotiating on the home.
On the other hand, do you own any property that is likely separate property that you want your fiancé to have a stake in during divorce? For example, some people own separate property businesses that their fiancé contributes to. Those contributions could be financial or simply sweat equity in nature. In any event, determine if your business is likely to separate property. From there, negotiate on how your spouse’s contributions are provided for in a pre nuptial agreement.
Expenses of Daily Living During the Marriage
One great aspect of a prenuptial agreement is that you can use it as a roadmap for your marriage. A map helps you to avoid potholes, dead ends, and other hazards. These problems lead to divorce in many situations. By negotiating these subjects now you can avoid the worst outcomes in a marriage. Why not try and resolve problems with your fiancé while you are on good terms? Negotiations with your spouse during a difficult divorce are not as amicable.
How are living expenses going to be shared for the two of you? Do you expect that they are going to be split evenly? If only one spouse is working, then does that change the expectation on shared living expenses? Issues like combined bank accounts shared checking accounts, and transparency in spending are all relevant here. The day-to-day costs of marriage add up over time. Accounting for these now is what matters.
Part of this discussion revolves around items like medical and dental insurance. How are uninsured costs allocated between you and your fiancé? Do you want to continue this into your marriage? This type of arrangement is relevant when dealing with a child custody case. However, it also becomes important in a situation where a pre nuptial agreement is negotiated.
How Filing Taxes are Handled During a Marriage
One issue that arises during a marriage that does not during a dating relationship is taxes. Determining how taxes will be filed during the marriage creates a plan that is actionable during the marriage. As it happens in a marriage, one spouse handles issues regarding taxes. The other spouse hopes that their partner is handling matters correctly. There is little accountability. Much of the time the problems which arise from the failure to pay taxes are not made known until years later.
Instead of putting yourself in a position where you are on the defensive with taxes why not have a plane stablished before your marriage begins? This way you are accountable to one another. The last thing you want to do is go into a marriage where an important subject like taxes is completely up in the air. Remember that this is a topic that neither of you dealt with during your dating relationship. That all changes in the marriage.
With complex issues like taxes, it is best to have professionals in your corner. Certainly, tax preparers, accountants, and other financial professionals are important. Additionally, working with an experienced family law attorney with the Law Office of Bryan Fagan is also of great assistance. We know what works and what doesn’t work for families. To that end, we listen to your circumstances and provide information based on that conversation. A consultation with one of our experienced family law attorneys is free of charge.
Wages, Earnings, and Salary
One of the key points to understand regarding Texas community property law is that earnings during the marriage are typically community property. As a result, the income you earn is just as much your spouse’s as it is yours. The same could be said of their income. Depending upon the earnings dynamic of your relationship this is the topic which may interest you.
Ultimately, the question you need to answer is whether you are going to treat your income in this way. Look at factors like your income, your age, and whether this is a second or even third marriage. Assessing your situation based on these circumstances allows for both of you to be honest with yourselves and one another. You may have had a prior marriage where sharing income in assets was a negative. This undoubtedly will influence how you approach your second marriage.
For those of you who have investments or another type of income, how will this be treated in the marriage? Would divorce cause this income to be a part of the community estate? Will each of you choose to retain your dividends and investments as separate property? Working through issues regarding anticipated feature earnings or dividends these are relevant issues to consider. Before receiving this property and depositing it in a community account you should plan. Doing so resolves issues and gives you all peace of mind.
Retirement Benefits
One of the most discussed topics in Texas divorce cases is how retirement benefits are divided. Depending upon your age this is a major issue that spouses work through. Negotiating the complex division of our retirement account during a divorce is difficult. Consider this if you are a person in your golden years. Most of your working life is behind you. The retirement savings built in your life reflect your hard work. The prospect of a divorce has the potential to greatly change the dynamic of your retirement years.
Look at the circumstances of you and your fiancée. Consider your age gap .A younger spouse need for retirement at this moment maybe much less than yours. In that sense negotiating on a division of other assets during a divorce is sensible. Leaving you with Retirement savings while your spouse walks away with cash is one way to consider this subject in a divorce scenario.
From the experience of the attorneys with the Law Office of Bryan Fagan, this discussion is made easier before the marriage. Once the marriage begins emotion and additional circumstances are in play. These will invariably color your approach to this subject. Rather than position yourselves into a corner why not allow yourself to negotiate now? At this point, the two of you are on good terms. Additionally, each of you may enlist the support of an experienced family attorney. Relying upon the guidance of an attorney while negotiating a pre nuptial agreement suits many parties.
Will money be paid out when divorce is filed?
Many times, spouses decide to pay one or the other a sum of money upon the filing of a divorce. Spouses may pay each other money upfront to expedite the property division. This upfront payment can also signal goodwill between spouses. Many times, a spouse who does not earn an income feels at a disadvantage during a divorce. This is because their spouse holds most of the property and controls spending. This is a disadvantage for the non-working spouse.
Being in a position like this means having to set deadlines and timelines for payment. Determining that a certain sum of money will be paid from one spouse to the other after a divorce is filed comes up often. However, do not leave the date of this payment up in the air. Instead, specify when the payment shall be made. This ensures there are defined expectations for the payment of this property.
Texas law has specific circumstances under which spousal maintenance can be ordered by a judge. In other circumstances, parties agree to pay informal spousal support. This is where having a plan matters. Establish any spousal support amounts in your pre nuptial agreement. Plan to pay spousal support either as a lump sum payment or in periodic payments over time.
Renegotiating a prenuptial agreement
Life changes, and your prenuptial agreement may need to adapt as well. Additionally, pre nuptial agreements also come into play when the spouse passes away. All these elements require careful planning. Planning for an estate matters when a spouse dies is a part of many pre nuptial agreements. One of the types of considerations is whether life insurance needs to be maintained for a spouse or your minor children. Detail the type of policy coverage amount and any other information you would like to include.
Next, is there a point in time where your pre nuptial agreement can be updated? This may come in the form of a postnuptial agreement. Or, simply add an amendment to the pre-existing pre nuptial agreement. Again, circumstances do change over time. It may be worth your time to determine that updates need to occur because of these changes. Working through subject matter like this is part of the negotiation process.
Working with an attorney to assist your family
Choosing to look at a pre nuptial agreement as a precursor to a divorce is reasonable. However, assuming that a divorce is necessary after drafting a prenuptial agreement would be incorrect. Rather, taking into consideration the twists and turns of life often helps people understand the importance of intentionality. A pre nuptial agreement is something that displays a propensity towards planning and forethought.
When going through your options related to pre nuptial agreements consider the importance of an experienced family law attorney. For example, the attorneys with the Law Office of Bryan Fagan walk alongside clients every day in divorce scenarios. We see what works for families and what does not work. As a result, we are in a unique position to assist individuals like yourself who are planning to avoid those circumstances. Talking with a person going through a difficult divorce would cement in your mind the importance of planning a pre nuptial agreement.
Pre nuptial agreements require specialized focus
Wandering into a circumstance where you are drafting a pre nuptial agreement is a mistake. Rather, it is best to have a plan when creating such an important document. Do your homework in preparation for this process. However, you should have experienced counsel by your side, as well. The Law Office of Bryan Fagan is ready and willing to be that trusted counsel assisting you.
